City controller gives update on possible fate of rollover funds, neighborhood council budgets and elections

On one of her first trips to the Westside this year, Los Angeles City Controller Wendy Greuel briefed the Del Rey Neighborhood Council on a variety of budget-related topics Thursday, March 11th.

Greuel discussed two items of interest that Del Rey and other neighborhood councils have been worried about since the City Council began considering how to lessen the city’s $212 million shortfall: possible reductions in their funding and the status of their rollover funds.

Miguel Santana, the city’s chief administrative officer, has recommended taking all of the leftover funds, but Greuel thinks that is too drastic.

“There’s a lot of discussion about how long you should have the rollover funds,” Greuel told the audience. “In every other city department other than the mayor, the City Council and DONE (Department of Neighborhood Empowerment, which supervises the advisory councils) rollover funds are swept every year and go back into the general fund to balance the budget.”

Greuel said there has been some discussion among neighborhood council leaders about having only one or two years to accumulate a base of rollover funds.

“A three-year thing makes it very, very difficult to manage,” she said.

The city controller said she recognized there was a great deal of anxiety among many neighborhood councils regarding a possible sweep of the money that some boards have saved from their city allotments from as long as two or three years ago. Del Rey, for example, has $93,000 in unused funds.

City officials are proposing to allow the local councils to keep any saved funds that have been appropriated in councils’ past minutes and have been approved for specific projects. Those that have not been recorded face the possibility of being swept back into the city’s coffers.

“I think the chapter in the book hasn’t been written about how it is going to be totally reconciled, but I think there is a recognition on the part of the council, the city attorney and DONE that they can’t just take it if you’ve already done what you needed to do with them,” Greuel said.

Sharon Commins, the first vice president of the Mar Vista Community Council, attended the Del Rey meeting to get an explanation from Greuel on the status of the evolving rollover policy.

“She gave a good overview of the issue,” Commins answered when asked if the controller addressed her concerns.

As of June 30th last year, Mar Vista had $60,000 in rollover money.

The controller said she doesn’t think that neighborhood council budgets will be cut to $11,000 annually, as some City Council members have proposed.

“There will probably be a reduction to what you’re getting now, but I think that (the City Council) recognizes that neighborhood councils are much more engaged in the budget process than they were a couple of years ago,” she said.

Greuel also touched on some of the audits that her department has conducted since the first three months of the year and what the results yielded.

“The findings showed that, while engagement and activism have grown, there has been a systematic failure of accounting and fiscal oversight of the neighborhood councils by DONE,” Greuel wrote in a report to Mayor Antonio Villaraigosa and the City Council.

DONE General Manager BonHwag Kim asked the controller to launch the financial investigation of his agency in January because he was aware that his department, while not fully staffed, had been unable to adequately monitor the financial activity of the local councils.

“We knew that we could not monitor neighborhood council spending because we can’t keep up with the payment process,” Kim explained in an interview with The Argonaut.

Greuel said that DONE was never set up to manage the finances of all the neighborhood councils, of which there are now 90.

“The audit clearly found that was the case,” she said.

DONE has since been recommended for consolidation with the Community Development Department, a move that local neighborhood councils oppose.

“Community Development was not set up to work with the neighborhood councils as DONE was,” said Mark Redick, president of the Del Rey council. “Therefore, my real concern is that the commitment to the neighborhood council system will decline in a material way.”

Greuel feels that neighborhood councils should make their case to the City Council regarding what role, if any, they want DONE and the Board of Neighborhood Commissioners to serve in the future.

“We have to define that role, and whatever it goes, we’ll make sure that happens,” she said.

The controller, a former city councilwoman from the San Fernando Valley, expressed an admiration for neighborhood councils.

“At one point, I had over 12 neighborhood councils in my district,” Greuel recalled. “It was a great partnership.

“The value of neighborhood councils is critically important.”

A topic that touched the nerves of some members of the city’s governing body last month was based on another audit Greuel’s office conducted. Over the last 12 years, the report found that approximately $25 million has been accumulated from pipeline franchise fees and the sale of city properties that members of the council control for their respective districts. With a $212 million shortfall looming like a dark cloud on the horizon, Greuel recommended that the council offer this largess to help close the deficit.

Some council members took issue with the controller’s recommendation, arguing that they use the money to pay for various community projects.

“Over the last few years, the council and the mayor had adopted a policy that we would put that money into the general fund,” Greuel explained. “But what happened is a lot of pieces of property actually did not go onto the market and were going to be held until the policy went into effect.”

Greuel told the audience that she thinks the policy should be changed permanently because a number of council districts get windfalls of money, especially from the pipeline franchise fees.

The council voted last month to put $12 million into the city’s reserve fund.

After the meeting, Greuel reiterated her position on the discretionary funds and the pipeline fees going back into the general fund.

“We’re under a tough budget crisis and everyone is having to make concessions. The time has come to that we can’t have 15 different fiefdoms,” Greuel said. “It really is about one city.”

Regarding the possible sale of city-owned buildings to generate additional money, Greuel said those plans should be reviewed on a case by case basis.

“Each one you have to look at individually, because with some assets, if you sold them now, you wouldn’t get very much for them today,” the controller noted. “You have to take that into consideration, and you also have to consider if you have a design project that is going forward.

“What I don’t want to do is hold onto property that we’re never going to use that we could sell,” Greuel continued. “That’s my priority. Let’s look at it not parochial, but from a greater standpoint.”

There are no such city assets in Del Rey that have been considered for sale. In Mar Vista, the community council is rehabilitating former Los Angeles Fire Station 62 on Centinela Avenue in hopes of turning the abandoned building into a community center.

Redick was grateful that Greuel came to Del Rey to talk to his constituents.

“I think she answered our questions as well as can be expected,” Redick said the day after the council meeting.

He also agreed with her views on neighborhood councils.

“I think that she is absolutely right on neighborhood councils being viewed as assets to our communities,” Redick said.

The City Council and Villaraigosa are expected to consider final decisions on neighborhood council budgets and the rollover policy next month.